Why Are We Building So Much So Fast?

This piece was written in March of this year. Recently several people have asked me to reprint it. As the Mayor has just today recognised that we have thousands of empty properties in the City (after years of being told so), I thought it would be a good time to post it again.

 


 

We assume — or at least I hope we should assume — that the development of our City is being conducted along some kind of reasonable prediction regarding growth rates, of population, say, and thereof of housing units required. After all, it would be madness just to build stuff with public funds — roads, infrastructure, amenities, etc — that wasn’t needed, right?

Growth projections for the City and the Metro Region from 2006 through 2041 are officially contained in the Vancouver Regional Context Statement (RCS) which was adopted in April 2013.  For purposes of this review, the relevant estimates are found at page 9.[1].

Table 1

These estimates project a need for 97,500 new housing units for an additional 163,800 population during the period 2006-2041. We now have ten years of data to work with (2006-2015), so how are we doing?  The following table shows the housing units approved in that period [2]

Building Stats

 

That shows that Vancouver City Council has approved a net increase from 2006-February 2016 totaling 32,849 housing units.

Now, a little math (can’t be avoided, I’m afraid).  For the period 2006-2041, the official projection was for an increase of 97,500 units.  With 32,849 already approved, that leaves 64,651 to approve in the period 2016-2041 – a requirement of 2,586 per year for the next 25 years.

However, we are approving far more than 2,586 a year.  The average over the last five years is 5,068 per year, and that rate is increasing so fast that the average for the last two full years (2014, 2015) is 5,984 building units per year – just about double what we actually need according to the City’s own estimates.

Approved Units

What does this mean?  It means that we will build the number of housing units we need in 2041 considerably in advance of that date.

Building Timeline

This graph shows the actual housing approvals through to 2016 (red), and the light blue shows the rate of building approvals we need to meet the RCS target.  The green line shows the projection of housing units if we continue to build at the average of the last five years, while the purple uses the average for the last two years.

The green line meets the RCS requirements by 2028 (13 years early).  The purple line meets RCS requirements by 2026 (15 years early).

Continuing to build at the rate set in 2014 and 2015 will create an additional 195,059 housing units by 2041 – almost 100,000 more units than the projections say are required.

What’s the rush?  Why are we building way beyond – in fact, almost double — what we officially claim are the requirements to meet our growth projections?  Right now, we are on track to meet the housing needs of 2041 by the mid-2020s; what are the developers and builders going to do then?

Clearly we need to slow down the approval process.  However, the graph of housing approvals from 2006 to 2016 indicates that the rate of approvals is actually accelerating rapidly, with 2016 already rushing towards another 6,000+ total.

If City Planning and City Council choose not to slow down the amount of building in the future, it is surely incumbent on them to explain who these extra housing units are for.  Moreover, I hope the development and building industries are chatting amongst themselves, deciding who will survive the big mid-2020s shake out and who will fail.

I guess, as a final thought, that the City could simply announce that their projections were wrong and the building approval rate is necessary.  However, then they would have to explain why – just three years ago – they got their sums wrong by 100%.

So, Mr Mayor, what is the reason we are building so much and so fast?

 

Sources:

[1]  The Regional Growth Strategy is athttp://vancouver.ca/docs/council/regional-context-statement-council-report.pdf

[2] All housing figures are from http://vancouver.ca/home-property-development/statistics-on-construction-activity.aspx (2011-2016) andhttp://former.vancouver.ca/commsvcs/CBOFFICIAL/stats/index.htm (2006-2010).

 

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One Response to Why Are We Building So Much So Fast?

  1. Keith says:

    Because it’s all been sold. From Bob Rennie’s speech to the Urban development institute a couple of weeks ago:

    Of the 1,694 new condos being completed in Burnaby and New Westminster this year, 86 percent have already been sold. In Coquitlam, Rennie said that 94 percent of the 1,107 completions have been sold. And over the next four years, there will only be 3,312 new condos in downtown Vancouver, with 90 percent already sold.

    “The good news is over 4,500 West Side condos will be delivered in 2016, 2017, and 2018,” Rennie added. “The bad news is that inventory is already over 90 percent sold.”

    In East Vancouver, the situation is even worse: 95 percent of the 3,500 condos coming on-stream in the next three years have been sold.

    “This explains the pressure on land,” he said. “We are going to see a land sale of over $500 per square foot buildable west of Main.”

    Rennie claimed that this will lead to condo prices of $1,300 per square foot in this neighborhood.

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